Appendix — Olander v. State Farm Mutual Automobile Insurance
Supreme Court brief2003
Ask Donna
What actually matters in this document.
Text
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
No. 01-1947
BRIAN OLANDER,
Appeal from the
United States District
Court for the District
of North Dakota
Appellant,
vs.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY, ET AL.
7
.
+
*
*
+
*
+
*
*
*
+
+
Appellees.
The petition for rehearing en banc is granted. The
panel’s opinion and the court’s judgment of January 25, 2002,
are vacated.
This case-will be set for oral argument before the court
en banc in St. Louis, Missouri, during the September 2002 court
week.
Judge Bye took no part in this decision in this matter.
(5369-010199)
March 26, 2002
Order Entered at the Direction of the Court
/s/ Michael E. Gans
Clerk, U.S. Court of Appeals, Eighth Circuit
2a
APPENDIX B
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
No. 01-1947
BRIAN OLANDER,
Plaintiff - Appellant,
Appeal from the
United States District
Court for the District
of North Dakota.
V.
et Be Ss PAR Ia ERE I Ais E SILO DS DEI CGA EER ME EITICE ee a
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY, et al.,
* &£eetete*re* * *&* &
Defendants - Appellees.
Submitted: September 11, 2002
Filed: January 21, 2003
ait sitet nae Pie eee es Ra SSE SS Pe ae pte et eae ee ee
Before HANSEN, Chief Judge, LAY, HEANEY, McMILLIAN,
BOWMAN, WOLLMAN, LOKEN, MORRIS SHEPPARD
ARNOLD, MURPHY, RILEY, MELLOY, and SMITH, Circuit
Judges, en banc.
3a
LOKEN, Circuit Judge,
Brian Olander became a State Farm insurance agent in
Mandan, North Dakota in 1981. In August 1966, Olander was
charged with murder after a violent altercation with a
neighboring landowner. When Olander refused to take a leave
of absence until the criminal charges were resolved, State Farm
terminated his agency agreement and assigned other agents to
serve the State Farm policyholders previousiy served by
Olander’s agency. In 1999, Olander commenced this diversity
action against State Farm, alleging wrongful termination of the
agency agreement and related claims. The district court!
granted State Farm’s motion for summary judgment,
concluding that Section III.A. of the written State Farm Agent’s
Agreement unambiguously made the parties’ contractual
relationship terminable at will. Section IIL.A. provides:
This Agreement will terminate upon your death.
You or State Farm have the right to terminate
this Agreement by written notice delivered to
the other or mailed to the other’s last known
address. The date of termination shall be the
date specified in the notice, but in the event no
date is specified, the date of termination shall be
the date of delivery if the notice is delivered, or
the date of the postmark, if the notice is mailed.
Either party can accelerate the date of
termination specified by the other by giving
written notice of termination in accordance with
this paragraph.
' The HONORABLE RODNEY S. WEBB, Chief Judge of the United
States District Court for the District of North Dakota, adopting the Report
and Recommendation of the HONORABLE DWIGHT C. H.
KAUTZMANN, United States Magistrate Judge for the District of North
Dakota.
Le Aa RI a hi NS
4a
On appeal, a divided panel of this court reversed. The panel
concluded that two other provisions of the Agreement create an
ambiguity as to whether it was terminable only for cause;
therefore, summary judgment was inappropriate because
extrinsic evidence is admissible to construe this essential
contract term. Olander v. State Farm Mut. Auto. Ins. Co., 278
F.3d 794, 798-99 (8" Cir. 2002). Because this decision may
affect countless State Farm agency relationships in the Eighth
Circuit and nationwide and conflicts with a number of decisions
by other courts construing the standard form State Farm agency
contract, we granted State Farm’s petition for rehearing en banc
and now affirm.
The issue on appeal may be quickly summarized. If the
Agreement was terminable at will by either party, then Olander
has no wrongful termination claim, and his related claims were
properly dismissed as well. Under North Dakota law, the
construction of a written contract is initially a question of law.
Olander argues that extrinsic evidence -- most of it pre-dating
his State Farm Agents Agreement -- establishes State Farm’s
intent that its agents be terminated only for cause. Under North
Dakota law, such evidence is not admissible to vary the terms
of an unambiguous written contract. “However, if a written
contract is ambiguous, extrinsic evidence may be considered to
show the parties’ intent.” Des Lacs Valley Land Corp. v.
Herzig, 621 N.W.2d 860, 863 (N.D. 2001). “A contract is
ambiguous when rational arguments can be made for different
positions about is meaning.... When a contract is ambiguous,
the terms of the contract and the parties’ intent become
questions of fact.” Kaler v. Kraemer, 603 N.W.2d 698, 702
(N.D. 1999) (citations omitted). Here, the district court
concluded the contract is unambiguous and refused to consider
Olander’s extrinsic evidence. Our panel disagreed. Whether a
written contract is ambiguous must be determined from the four
corners of the document, construing the contract as a whole.
See Burk v. Nance Petroleum Corp., 10 F.3d 539, 542 (8® Cir.
Sa
1993) (applying North Dakota law). Ambiguity is a question of
law that we review de novo, just as we review the grant of
summary judgment de novo. Kaler, 603 N.W.2d at 702.
Section III of the State Farm Agent’s Agreement is
entitled “Termination of Agreement.” Other than providing
that the Agreement terminates upon the death of the agent
(which confirms this is a personal services contract), Section III
does not specify the grounds for termination. It simply
provides, “You [the agent] or State Farm have the right to
terminate this Agreement by written notice delivered to the
other.” In many cases, a contract’s silence on an issue creates
an ambiguity. But in this case, the contract’s silence is itself
unambiguous. The general rule in this country has long been
that a personal services contract of indefinite duration may be
terminated at will by either party. See Willcox & Gibbs Co. v.
Ewing, 141 U.S. 627, 635-36 (1891):1 RICHARD LORD,
WILLISTON ON CONTRACTS § 4.20 (4" ed. 1990). We
have applied this general rule in many cases, including Martin
y. Equitable Life Assurance Soc’y of U.S., 553 F.2d 573, 574-
75 (8" Cir. 1977), where we held that an insurance agency
contract having no fixed term was unambiguously terminable
at will under South Dakota law.” Likewise, a leading insurance
treatise states as the general rule for insurance agency contracts:
“If the agency contract fixes no time for its duration, as a
general rule, the agency contract may be terminated at any time
. Other cases in which we have applied the general rule include Crowell v.
Campbell Soup Co., 264 F.3d 756, 761-62 (8" Cir. 2001); Friedman _v.
BRW, Inc., 40 F.3d 293, 296 (8" Cir. 1994); Engelstad v. Virginia Mun.
Hosp., 718 F.2d 262, 266 (8" Cir. 1983); Eocoktal x. See, Mcmors Soap. 539
F.2d 1126, 1129 (8" Cir. 1976); McGinnis Piano & hmaha
Int’] Corp., 480 F.2d 474, 479-80 (8" Cir. 1973); jo Srey yma
v Bitterling, 209 F.2d 867, 878 (8 Cir. 1954), cert. denied, 348 U.S. 882
(1954); Merideth v. John Deere Plow Co., 185 F.2d 481, 482 (8 Cir. 1950),
cert. denied, 341 U.S. 936 (1951); Moore v. Sec. Trust & Life Ins. Co., 168
F. 496, 498-500 (8" Cir. 1909), cert. denied, 219 U.S. 583 (1910).
cscs NA ECLA
6a
at the election of either party.” 13 ERIC HOLMES, HOLMES’
APPLEMAN ON INSURANCE 2D §99.2, at 788-89 & n.25
(1999). Accord Kaldi v. Farmers Ins. Exch., 21 P.3d 16, 18, 20
(Nev. 2001); Patillo v. Equitable Life Assurance Soc’y of U.S.
502 N.W.2d 696, 699 (Mich. App. 1992); James H. Washington
Ins. Agency v. Nationwide Mut. Ins. Co., 643 N.E.2d 143, 147
(Ohio App. 1993).
North Dakota has codified this general rule for contracts
of employment. See N.D. CENT. CODE § 34-03-01 The
Supreme Court of North Dakota has also applied the rule to
personal services contracts, under which agents and
professionals who are not employees provide on-going services
of indefinite duration. See N.Am. Pump Corp. v. Clay Equip.
Corp., 199 N.W.2d 888, 894 (N.D. 1972) (exclusive agency
agreement to sell equipment), Myra Found. v. Harvey, 100
N.W.2d 435, 437 (N.D. 1959) (bookkeeping services). That the
Supreme Court of North Dakota would apply the general rule
to Section IILA. of the State Farm Agent’s Agreement is
confirmed by Wadeson v. Am Family Mut. Ins. Co., 343
N.W.2d 367, 371 (N.D. 1984). In Wadeson, a contract between
an insurer and its district manager provided, like Section II1.A.,
that it “may be terminated by any party as to its interest by
giving written notice to the other,” without specifying the
grounds for termination. The court held that the contract was
terminable at will, not only for good cause.
Thus, the North Dakota general rule establishes that the
Agreement’s silence as to its duration is, without more, an
unambiguous declaration that is terminable_at will by either
party. Seeking to avoid the general rule, Olander argues, and
the panel majority agreed, that two other provisions of the
Agreement create an ambiguity that requires the consideration
of extrinsic evidence.
First, Section II.B. of the Agreement provides: “In the
event [State Farm] terminate[s] this Agreement, you are entitled
upon request to a review in accordance with the termination
review procedures approved by the Board of Directors of [State
Farm], as amended from time to time.” The panel majority
surmised that “one rational explanation for the existence of the
review procedure is to ensure that any termination was made for
good cause, and not capriciously.” 278 F.3d at 798. However,
two courts have squarely rejected the contention that this
provision renders the State Farm Agent’s Agreement
ambiguous. See Mooney v. State Farm Ins. Cos., 344 F.Supp.
697, 699-700 (D.N.H. 1972); Ex parte Gardner, 822 So.2d
1211, 1219 (Ala. 2001). Another court construed a Farmers
Insurance Exchange agency contract as unambiguously
terminable at will despite a similar review provision:
The review board process gives the
agent the opportunity to assert that it is not in
the best interest of Farmers to sever the agency
relationship. It also gives the agent, in
appropriate circumstances, a forum in which to
argue that the termination was the product of
bias or prejudice on the part of the person who
made the initial decision to terminate the
relationship.... Thus, even without a requirement
of cause, the review board serves a viable
purpose under the contract.
Kaldi, 21 P.3d at21. Similarly, many other cases have held that
an employer’s contract termination procedure did not render an
cepinymeent ona terminable omy for cause. a
, 705
‘A.2d 696, 699 (Me. 1997): aie Hees. loc. v. Dwiacins
596 A.2d 1069, 1076-77 (Md. 1991); Vancheri v. GNLV Corp.,
777 P.2d 366, 369-70 (Nev. 1989).
;
i
|
i
8a
Second, the panel majority relied upon the statement in
the Agreement’s preamble that the parties “expect that by
entering into this Agreement, and by the full and faithful
observance and performance of the obligations and
responsibilities herein set forth, a mutually satisfactory
relationship will be established and maintained.” However, this
hortatory language may not properly serve to create an
ambiguity in an otherwise unambiguous termination provision.
See Aramony v. United Way of Am., 254 F.3d 403, 413 (2d
Cir. 2001) (holding that recitals in a contract’s preamble may be
useful in interpreting ambiguous terms but “cannot create any
right beyond those arising from the operative terms of the
document”). When one operative term in a contract is
unambiguous, as the termination provision is here, other
provisions must be read so that they are consistent with the
plain meaning of the unambiguous term, See Burk, 10 F.3d at
543-44.
To our knowledge, every court but one has interpreted
the State Farm Agent’s Agreement as being unambiguously
terminable at will. See Mooney, 344 F.Supp. 697; Gardner,
822 So.2d 1211; Melnick v. State Farm Mut. Auto. Ins. Co.,
749 P.2d 1105, 1110-11 (N.M. cert. denied, 488 U.S. 822
(1988); Vitkauskas v. State Farm Mut. Auto Ins. Co., 509
N.E.2d 1385, 1387 (Ill. App. 1987). The one exception is the
Ninth Circuit’s unpublished opinion in Sandberg v. State Farm
Mut. Auto. Ins. Co., No 97-55971, 1999 WL 369805 (9" Cir.
1999), cert. denied, 528 U.S. 1118 (2000). However, in holding
that summary judgment was inappropriate on the terminable-at-
will issue, the court in Sandberg applied California law, which,
unlike North Dakota law, permits the consideration of extrinsic
evidence on the question of whether a contract is ambiguous.
Moreover, the court in Sandberg affirmed the grant of
summary judgment in State Farm’s favor. Applying the -
definition of good cause under California law -- “a fair and
9a
honest reason, regulated by good faith, that is not trivial,
arbitrary or capricious, unrelated to business needs or goals, or
pretextual”-- the court concluded that State Farm had good
cause to terminate an agent who had sued State Farm seeking
punitive damages for fraud. 1991 WL 369805, at *2. Here,
Olander was terminated after he was indicted for murder and
refused to take a leave of absence until the criminal proceedings
were resolved. Thereafter, a jury convicted him of
manslaughter, and he spent many months in prison before the
Supreme Court of North Dakota reversed his conviction.
Though he was ultimately acquitted after a second trial, State
Farm’s summary judgment motion was supported by an
affidavit from the Director of Agent Licensing and
Investigations for the North Dakota Insurance Department
averring that, had Olander not lost his agent’s license when he
was terminated by State Farm, “at the time of his conviction of
a felony, the Department would have taken action in some form
to suspend and/or possibly revoke his license.” These events
make it clear that, if the definition of good cause under
California law applied in this case (which of course it does not),
State Farm would be entitled to summary judgment on the
ground that it had good cause to protect its business interests by
terminating Olander in August 1996.
Because the State Farm Agent’s Agreement was
unambiguously terminable at will as a matter of law, the district
court properly declined to consider the extrinsic evidence
submitted by Olander in granting State Farm’s motion for
summary judgment. Accordingly, the judgment of the district
court is affirmed.
LAY, Circuit Judge, dissenting, with whom HEANEY and
McMILLIAN, Circuit Judges, join.
I join in Judge HEANEY’s dissent.
10a
This controversy, rooted in diversity - jurisdiction,
involves the question of whether a contract is ambiguous under
North Dakota law. Requiring a routine diversity case such as
this to be reheard en banc violates the Federal Rules of
Appellate procedure and the longstanding policy of this court.
The Federal Rules of Appellate Procedure state that an
en banc “hearing or rehearing is not favored and ordinarily will
not be ordered except (1) when consideration by the full court
is necessary to secure or maintain uniformity of its decisions, or
(2) when the proceeding involves a question of exceptional
importance.” Fed. R. App. P. 35(a). The Internal Operating
Procedures of the Eighth Circuit elaborate:
The issue of whether a case should be reheard
en banc is separate and distinct from the issue of
whether the case should be reheard by the panel.
A panel may rehear -a case en banc if it
questions whether its decision was correct. The ~
court may rehear a case en banc if the case “is
of such significance to the full court that it
deserves the attention of the full court.”
-
United States Court of Appeals for the Eighth Circuit, Internal
Operating Procedures IV.D. (Quoting Western Pac. R.R. Corp.
v. Western Pac. R.R. Co., 345 U.S. 247, 262-63 (1953)).
The first en banc decision I sat on after appointment to
this court in 1966 related to a death sentence under federal law.
See Pope v. United States, 372 F.2d 710 (8" Cir. 1967) (en
banc). Since that time, this court has averaged approximately
six to ten en banc hearings a year. My research shows there
have been eight en banc cases in a period of thirty-six years
where diversity of citizenship constituted the jurisdictional root
for the case to be in federal court. None of those cases;
however, were voted to be heard by the full court simply
lla
because of the meer sain — of state law. These cases
a many ? senaniions or fede ral per n al law. I am
unaware of any en banc case from this or any other circuit
where the narrow issue presented was the alleged ambiguity of
a contract under state law. For example, in Lehman Bros. Kuhn
Loeb Inc. v. Clark Oil and Refining Corp., 739 F.2d 1313 (8"
Circuit 1984) (en banc), the legal merits turned on the
construction of a contract, but the case was placed en banc
because of a dispute over the constitutionality of the portion of
the Federal Magistrate Act providing for trial before the
magistrate judge with the consent of the parties. Id. at 1314.
When scheduling a case to be heard en banc in any
federal court of appeals, one must consider the limited
resources of that court in terms of whether the issue itself is so
significant that it should require the time of all of the active and
participating senior judges involved. Allowing this case to
proceed en banc invites every lawyer in every routine appellate
case in this circuit to petition for rehearing en banc without a
thought as to the significance of the issue involved or the
limited resources of the court. Albeit, the court does not have
to grant any petition, but the court must read every petition
filed.
Many of our sister circuits have deemed questions of
state law to be so inconsequential that they have, by rule,
established that such a case cannot be reheard en banc.’ For
example, the rule in the Eleventh Circuit reads:
: Several of our sister circuits include similar admonitions in their local rules
and internal operating procedures. See United States Court of Appeals for
the Third Circuit, Local Appellate Rule 35.4; United States Court of Appeals
for the Fifth Circuit, Rule 35.1; United States Court of Appeals for the Tenth
Circuit, Rule 35.2
{
12a
Alleged errors in a panel’s determination of
State law, or in the facts of the case (including
sufficiency of the evidence, or error asserted in
the panel’s misapplication of correct precedent
to the facts of the case), are matters for
rehearing before the panel but not for en banc
consideration.
United States Court of Appeals for the Eleventh Circuit, Rule
35-3; accord United States Court of Appeals for the Sixth
Circuit, Rule 35(c).* The Seventh Circuit has written:
Further, and perhaps most revealing, the petition
presents only issues of state law. As such
petitioners had an added burden to explain why
an issue of [state] law was of such exceptional
importance that it warranted review en banc in
a federal court, the decision of which would not
even be binding on [that state’s] courts. A
purely state law issue would need to have
national significance to warrant such review.
HM Holdings, Inc. v. Rankin, 72 F.3d 562, 563 (7" Cir. 1995).
As an example of the type of case with such national
significance, the court offers Todd v. Societe Bic., S.A., 21 F.3d
1402 (7 Cir. 1994) (en banc), and Todd v. Societe Bic., S.A..
9 F.3d 1216 (7" Cir. 1993) (en banc), which considered
questions of Illinois law in the context of massive products
liability litigation.
Here, as in HM Holdings, there is an utter lack of national
significance to the state law issue presented. The decision will
have limited significance even within the North Dakota since
‘in the Ninth Circuit, diversity cases are deemed non-precedential and
seldom result in published opinions.
13a
the state supreme court can correct any error in the panel’s
interpretation. In fact, it appears the only basis for the petition
for rehearing en banc is that State Farm argues it will affect
construction of its contracts on a nationwide basis. It has long
been recognized that “[t]he function of en banc hearings is not
to review alleged errors for the benefit of losing litigants.”
United States v. Rosciano, 499 F.2d 173, 174 (7 Cir. 1974);
see also Western Pac., 345 U.S. at 262-63.
For this circuit to differ from all of our sister circuits, I
respectfully submit, trivializes the federal judicial process.
Throughout my tenure on the court, our judges have stressed the
need to conserve judicial resources and to avoid en banc
hearings whenever possible. Two senior judges with a
combined tenure of seventy years on the court have found the
contract was ambiguous. No judge is perfect and we may well
be wrong, but that is no reason to place a case such as this
before *%ie en banc court. To do so violates the spirit, if not the
letter, of the Federal Rules of Appellate Procedure and this
court’s longstanding policy.
___ If this court certified the narrow issue involved to the
North Dakota Supreme Court, it would indeed be embarrassing,
and the court would undoubtedly refuse to grant certification. -
Yet, such an effort to certify would be far more desirable than
utilizing the limited resources of the full court of appeals to
guess what the North Dakota Supreme Court would do. The
merits of the case should not in any way control the voting of
the active judges to place this case en banc. As a diversity case
applying North Dakota law in a particularly fact-bound context,
no other court in the country is bound by this decision,
including the North Dakota Supreme Court. In addition, my
limited research discloses that this is the first case in the United
States to ever address en banc a routine question of whether a
contract is ambiguous under state law. This fact alone
ee
14a
mandates reconsideration of our en banc order as being
improvidently granted.
It has been said that this case is important because it is
a ruling of this circuit and thus becomes the law of this circuit.
Such an argument makes little sense. This argument
misunderstands the basic principle of Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938). Our ruling must follow the law
of the state from which this case arises. It does not affect the
law of any other state. The Supreme Court of North Dakota
may well change our ruling tomorrow.
Since this case has such little precedential or national
significance, the court shouid not have heard the case en banc.
For these reasons, I respectfully dissent.
HEANY, Circuit Judge, dissenting, with whom LAY and
MCMILLIAN, Circuit Judges, join.
In reviewing a diversity case en banc, our only
responsibility is to decide the case according to the laws of the
relevant state, in this case, North Dakota. It is not, as the
majority suggests, our task to determine whether State Farm
Insurance Company can terminate agents’ contracts in any state
without cause, any more than it is our duty to protect the agents
who have spent years building a successful agency for
themselves, only to have their life’s work taken away from
them without cause. National uniformity is not and never has
| been a goal of federal courts in interpreting contacts in diversity
cases. We remain convinced that the original panel decided the
matter correctly, and that the district court erred by granting
summary judgment to State Farm and denying Brian Olander’s
motion to set aside the judgment pursuant to Fed. R. Civ. P.
60(b). We therefore dissent.
Background
15a
We summarize the history of this case to highlight
aspects of the matter that the majority did not address. In 1979
Brian Olander became a trainee agent for State Farm and
entered into an agent’s agreement in 1981. By the terms of the
agreement, Olander was an independent contractor authorized
to represent State Farm in Mandan, North Dakota. For
seventeen years he was very successful. By 1996, he had
secured ever 5,000 active policyholders, and his take-home
commissions were approximately $200,000 year. In all his
years with State Farm, Olander delivered exemplary service to
his customers and provided large profits and fierce loyalty to
State Farm. He received no adverse ratings from State Farm.
On Augzist 16, 1996, Olander was arrested for homicide
after an altercation with his neighbor. Thereafter, State Farm
offered Olander an unpaid leave of absence with the following
conditions:
State Farm would service the business assigned
to your account, and you would receive no
:
absence. State Farm would service the business
from a company facility, and you would remove
all signs from your current office which identify
State Farm.
You would not identify yourself as a State Farm Agent,
nor would you contact any State Farm policyholders in
regard to insurance...
If you are interested in such 2 leave of absence
arrangement, which we would anticipate would
continue no longer than the resolution of the criminal
prosecution pending against you, but whizh could be
l6a
terminated by either of us at any time (thus terminating
your Agent’s Agreement), please let me or Lou Santoro
know by August 30, 1996, and we will prepare an
appropriate amendment to your Agent’s Agreement.
anes If I have not heard from you by August 30, we will
take steps to terminate your Agent’s Agreement
effective August 31, 1996.
(J.A. at 69 (emphasis added)). Olander refused to accept the
proposal, and State Farm terminated the agent’s agreement. It
subsequently seized Olander’s business records, computers, and
other policy information, and his policies were assigned to other
agencies in the area.
Olander’s murder trial commenced in April 1997. The
jury returned a verdict, finding Olander guilty of manslaughter
and acquitting him of murder. In March 1998, the North
Dakota Supreme Court reversed Olander’s conviction because
of instructional error on the issue of self defense. He was tried
a second time and acquitted of ali charges. By this time,
however, he had lost his valuable agent’s agreement, and
without an insurance company sponsor, he could not be
licensed as an insurance agent.
Ir; 1999, Olander instituted an action against State Farm
alleging that: (1) the termination of his agent’s agreement
constituted a breach of contract; (2) State Farm tortiously
interfered with the business relationship he developed with his
clients; and (3) State Farm was unjustly enriched by his
termination. State Farm promptly filed a motion for summary
judgment, which was granted by the magistrate on February 7,
2001. Thereafter, the district court adopted the magistrate’s
report. Olander then filed a motion to set aside the judgment
pursuant to Fed. R. Civ. P. 60(b) based on newly discovered
evidence and failure to make disclosure required by discovery.
17a
The district court denied both motions, and Olander appeals the
district court’s summary judgment ruling on his breach of
contract claim and its denial of his 60(b) motion.
Discussion
The majority holds that the independent agent’s
agreement was terminable at will by State Farm with or without
cause. We disagree wit’: that conclusion because the majority
ignores North Dakota law, which requires that any ambiguity in
a written agreement be resolved by considering the four corners
of the agreement. The majority looks only at the termination
clause and disregards the preamble and a contract provision that
provides for a review following termination.
The North Dakota Supreme Court has given a succinct
summary of the law relating to the interpretation of written
agreements:
The construction of a written contract to
determine its legal effect is generally a question
of law. Pamida, Inc. v. Meide, 526 N.W.2d
487, 490 (N.D. 1995). A court must interpret a
contract to give effect to the mutual intention of
the parties as it existed at the time of
contracting. N.D.C.C. § 9-07-03; Pamida, at
490. In interpreting a written contract, a court
should ascertain the intention of the parties from
the writing alone if possible. N.D.C.C. § 9-07-
04; Pamida, at 490. A written agreement
supersedes any prior oral agreements or
negotiations between the parties in the absence
of any ambiguity. Norwest Bank North Dakota,
Nat’l Ass’n v. Christianson, 494 N.W.2d 165,
168 (N.D. 1992).
18a
A contract is ambiguous when rationale
arguments can be made for different positions
about its meaning. Felco, Inc. v. Doug’s North
Hill Bottle Shop, Inc., 1998 N.D. 111, P12, 579
N.W.2d 576. Whether or not a contract is
ambiguous is a question of law. Moen v.
Meidinger, 547 N.W.2d 544, 547 (N.D. 1996).
Determining an ambiguity exists is merely the
starting point in a search for the parties’ intent
because an ambiguity creates questions of fact
to be resolved using extrinsic evidence. Id.
When a contract is ambiguous, the terms of the
contract and parties’ intent become questions of
fact. W. Vv .L.C. v. :
544 N.W.2d 127, 131 (N.D. 1996).
Kaler v. Kraemer, 603 N.W.2d 698, 702 (N.D. 1999).
The North Dakota Century Code instructs that when
interpreting a contract, “The whole of a contract is to be taken
together so as to give effect to every part if reasonably
practicable. Each clause is to help interpret the others.”
N.D.C.C. § 9-07-06. It is also well settled under North Dakota
law that [t]he intention of the parties to a contract must be
gathered from the entire instrument, not from isolated clauses,
and to every clause, sentence, and provision should be given
effect consistent with the main purpose of the contract.” Nat'l
Bank of Harvey v. Int’] Harvester Co., 421 N.W.2d 799, 802
(N.D. 1988). |
State Farm has persuaded the majority to rely upon the
following language within the insurance agreement to assert
that the contract is unambiguous in instructing that the agency
relationship with Olander was at all times terminable at will:
19a
A. This agreement will terminate upon your death.
You or State Farm have the right to terminate
this Agreement by written notice delivered to
the other or mailed to the other’s last known
address. The date of termination shall be the
date specified in the notice, but in the event no
date is specified, the date of termination shall be
the date of delivery if the notice is delivered, or
the date of the postmark, if the notice is mailed.
Either party can accelerate the date of
termination specified by the other by giving
written notice of termination in accordance with
this paragraph.
This section, on its face, sets forth the procedure by which the
parties to the agreement must give notice of termination. It says
nothing about whether the termination must be for cause or may
be at will. Certainly, rational arguments can be made for
different positions about its meaning. North Dakota’s parol
evidence rule recognizes this reality by allowing “proof of the
existence of any separate oral stipulations or agreements as to
matters on which a written contract is silent.” Schue v. Jacoby,
162 N.W.2d 377, 382 (N.D. 1968); see also Putman v.
Dickinson, 142 N.W.2d 111, 119 (N.D. 1966).
Initially, paragraph B of section II, which immediately
follows the provision at issue, entitles the agent to a review
following termination of the agreement by State Farm.’ While
> The provision reads:
B. In the event we terminate this Agreement, you are entitled
upon request to a review in accordance with the
termination review procedures approved by the Board of
Directors of the Companies, as amended from time to
(continued...)
20a
by no means foreclosing other interpretations, one rational
explanation for the existence of the review procedure is to
ensure that any termination was made for good cause, and not
capriciously. Cf. Kaldi, 21 P.3d at 21 (finding the review
procedure offers “the agent the opportunity to assert it is not in
the company’s best interest of the insurer to sever the agency
relationship....”). In addition, the preamble to the contract lends
further support to the plaintiff's argument. See United States v.
Tilley, 124 F.2d 85, 854 (8 Cir. 1941). Among a number of
other provisions, it states: “The Companies and the Agent
expect that ni sitting into this em, and bathe Inland
responsibilities hernin net _focth. a. seetmaly_sntiafacenty
relationship will be established and maintained.” Id. (emphasis
added.) This language is far from dispositive. It is, however,
additional textual support for plaintiff's argument located
within the four corners of the document. It suggests that if the
parties meet their contractual obligations, the relationship will
continue. Such an interpretation is inconsistent with State
Farm’s assertion that the agreement unambiguously allows for
termination regardless of the parties’ performance’.
(...continued)
time.
° in 1966, State Farm amended its agent’s agreement to delete from the
termination clause in effect at that time the words, “with or without cause.”
The reasons for this change were set forth by Henry Keller, Jr., the agency
vice president for state [sic] Farm at the time the decision to revise the
termination clause was made. In the detailed affidavit, Keller swore under
oath as follows:
13. In order to obtain the agent prospective on issues which
need to be addressed in the new contract, we set up a program to
obtain information from the agents. This informational program
revealed a major concern [on] the part of the agents that the
(continued...)
2la
The majority cites three cases for the proposition that
the Supreme Court of North Dakota would apply the North
Dakota Code provision relating to personal services to
insurance contracts and permit insurance agency contracts to be
terminable at will. We are not persuaded that these cases
support the view that the North Dakota Supreme Court would
accept the majority’s view in this case.
In Myra Foundation v. Harvey, 100 N.W.2d 435 (N.D.
1959), the North Dakota Supreme Court held that an agreement
(...continued)
company might terminate them arbitrarily or capriciously, without
good reason. If that were to occur, then the agents’ entire
investment in his agency would be lost. We determined that we
needed to address that concern, in order to assure that agents would
be willing to make the substantial investment in time, effort and
money contemplated by our independent contractor/career agent
approach.
14. We took steps in the AA 660 contract to address that
concern. First, we removed the words “with or without cause” from
the termination review provision, which would entitle any agent
whose agreement had been tremneind by the company to a review
of the decision...
15. We considered adding provisions which would specify the
reasons for which termination would occur, but...opted for the
approach...which gave agents the protection of a due cause
contract, but with more flexibility in defining the cause.
16. The removal of the words: “with or without cause” from
the termination provision was a necessary part of this exercise. We
knew that it would be neither logical nor consistent to keep a
provision stating that we could terminate “with or without cause”
right above a termination review provision to guard against
arbitrary and capricious terminations.
(J.A. at 714-15.)
Neen eee ee
22a
to provide bookkeeping services had been formed by the parties
through an exchange of letters. The plaintiff brought an action
to recover possession of certain books and records that it
alleged had been unlawfully detained by the defendant. The
defendant answered that he had legal possession of the books
and records by virtue of a lien for services performed for the
plaintiff and counterclaimed for the reasonable value of
services. The case was tried, and the defendant obtained a
judgment on his counterclaim. Plaintiff moved for judgment
notwithstanding the verdict or for a new trial. The motion was
denied and the plaintiff appealed. The North Dakota Supreme
Court remanded the case on a damage issue and simply noted
“that the contract, neither expressly not impliedly, fixes any
time for its duration. Either party might therefore terminate the
contract upon giving reasonable notice to the other.” Id. at 437.
No argument was made by either party on this issue, and the
only citation by the North Dakota Supreme Court was to 17
C.J.S. Contacts § 398 and 12 Am. Jur. (Contracts, Sec. 305)
860.
In v. Cla
Corp., 199 N.W.2d 888 (N.D. 1972), the plaintiff, a sales and
service corporation engaged in selling farm equipment, asserted
that an oral contract with the defendant, a manufacturer, gave
it the exclusive right to sell the defendant’s products within the
northern half of North Dakota and a small area in Northwestern
Minnesota. The jury returned a verdict for the plaintiff in the
| sum of $3,000. The North Dakota Supreme Court affirmed the
| judgment after eliminating interest on the amount prior to the
verdict. The only reference by the North Dakota Supreme
Court to the issues facing us, “the agreement could have been
terminated by either party on reasonable notice [and thus] ... the
agreement was not within the statue of frauds, even though it
was not terminated within one year of its commencement.” Id.
at 894.
23a
In Wadeson v. American Family Mutual Insurance Co.,
343 N.W.2d 367 (N.D. 1984), the plaintiff brought an action
against American Family, alleging his agency had been
terminated without cause. There was no indication in the case
that there was a written agreement between the parties and
certainly no indication that the agreement contained any
provisions similar to those contained in the instant case. The
North Dakota Supreme Court referred to the North Dakota
Code, stating: “An employment having no specified term may
be terminated at the will of either party on notice to the
other....” Id. at 369.
State Farm contends that North Dakota law prohibits
the use of parol evidence to vary the terms of a written contract
where, as here, the parties agree that the contract contains the
entire agreement. This argument is without merit. Putnam v.
Dickinson held parol evidence was admissible where a deed
was silent on a matter. The court indicated the parties did not
intend the agreement “to be a complete and final statement of
the whole of the transaction between them,” and the extrinsic
evidence was consistent with the terms of the agreement.
Putnam, 142 N.W.2d at 119. However, the North Dakota
Supreme Court has never held this to be the only circumstance
where parol evidence is admissible in a contract dispute. For
instance, in Jorgensen v. Crow, 466 N.W.2d 120 (N.D. 1991),
the state supreme court held the trial court had erred in
admitting parol evidence “that varied the purchases price of the
contract for deed.” Id. at 124. However, it found no error in the
trial court’s admitting “a prior oral agreement that the yearly
payment due under the contract for deed would be satisfied by
one season’s use of the pasture because that testimony does not
contradict a term of the written contract.” Id. The court has
explicitly stated that, when an ambiguity exists, “parol evidence
is admissible to explain existing essential terms or to show the
parties’ intent.” Bye v. Elvick, 336 N.W.2d 106, 111 (N.D.
1983). That is the situation we are presented with here.
24a
Whether or not the agent’s agreement expressed the entire
transaction between State Farm and Olander is of no
consequence.
In the instant case, we are presented with a contractual
provision that is silent on the subject of cause. Both parties
offer plausible explanations for this silence and Olander has
directed us to provisions within the agreement itself supporting
his interpretation. Therefore, reasonable persons could
rationally argue that the termination provision merely sets forth
the procedure for giving notice of termination without
specifying whether or not termination requires cause. “Because
reasonable people could make rational arguments in support of
contrary positions...there was a genuine issue of material fact
rendering summary judgment on this issue inappropriate.”
Pamida, Inc. v. Meide, 526 N.W.2d 487, 493 (N.D. 1995). In
light of this conclusion, it is unnecessary to address Olander’s
claims regarding his Rule 60(b) motion.
Because it is well settled under North Dakota law that
the entire contractual instrument, inclusive of all clauses and
provisions, must be considered to determine the intention of the
parties, we would remand this matter tc the district court for a
trial on the merits.
A true copy.
Attest,
CLERK, U.S. COURT OF APPEALS,
EIGHTH CIRCUIT.
25a
APPENDIX C
United States Statute
28 U.S.C. §46
Cases and controversies shall be heard and determined
by a court or panel of not more than three judges (except that
the United States Court of Appeals for the Federal Circuit may
sit in panels of more than three judges if its rules so provide),
unless a hearing or rehearing before the court in banc is ordered
by a majority of the circuit judges of the circuit who are in
regular active service. A court en banc shall consist of all circuit
judges in regular active service, or such number of judges as
may be prescribed in accordance with section 6 of Public Law
95-486 (92 Stat. 1633), except that any senior circuit judge of
the circuit shall be eligible
(1)
to participate, at his election and upon designation and
assignment pursuant to section 294(c) of this title and the rules
of the circuit, as a member of an en banc court reviewing a
decision of a panel of which such judge was a member, or
(2)
to continue to participate in the decision of a case or
controversy that was heard or reheard by the court en banc at a
time when such judge was in regular active service.
26a
APPENDIX D
Federal Rules of Civil Procedure
FRAP 35. EN BANC DETERMINATION
(a) When Hearing or Rehearing En Banc May Be Ordered.
A majority of the circuit judges who are in regular active
service may order that an appeal or other proceeding be heard
or reheard by the court of appeals en banc. An en banc hearing
or rehearing is not favored and ordinarily will not be ordered
unless:
(1) en banc consideration is necessary to secure or
maintain uniformity of the court’s decisions; or
(2) the proceeding involves a question of
exceptional importance.
27a
APPENDIX E
Local Rules for the United States Court of Appeals for
the Third Circuit
RULE 35.0. DETERMINATION OF CAUSES BY THE
COURT EN BANC
35.1 Required Statement for Rehearing En Banc
Where the party suggesting rehearing en banc is represented by
counsel, the suggestion shall contain, so far as is pertinent, the
following statement of counsel:
“I express a belief, based on a reasoned and
studied professional judgment, that the panel
decision is contrary to decisions of the United
States Court of Appeals for the Third Circuit or
the Supreme Court of the United States, and that
consideration by the full court is necessary to
secure and maintain uniformity of decisions in
this court, i.e., the panel’s decision is contrary to
the decision of this court or the Supreme Court
in [citing specifically the case or cases], OR,
that this appeal involves a question of
exceptional importance, i.e. [set forth in one
sentence].”
*
35.4 Caution
As noted in FRAP 35, en banc hearing or rehearing of appeals
is not favored. Counsel have a duty to the Court commensurate
28a
with that owed their clients to read with attention and observe
with restraint the Required Statement for Rehearing en banc set
forth in 3rd Cir. LAR 35.1. Counsel are reminded that in every
case the duty of counsel is fully discharged without filing a
suggestion for rehearing en banc unless the case meets the
rigorous requirements of FRAP 35 and 3rd Cir. LAR 35.1.
IOP 9.3 CRITERIA FOR REHEARING
EN BANC
9.3.1 This court strictly follows the precept of Fed.R.App.P.
35(a) and Local Appellate Rule 35.4 that rehearing en banc is
not favored and will not be ordered unless consideration by the
full court is necessary to secure or maintain uniformity of its
decisions or the proceeding involves a question of exceptional
importance.
9.3.2 This court does not ordinarily grant rehearing en banc
when the panel’s statement of the law is correct and the
controverted issue is solely the application of the law to the
circumstances of the case.
9.3.3 Rehearing en banc is ordinarily not granted when the only
issue presented is one of state law.
29a
APPENDIX F
Local Rules for the United States Court of Appeals for
the Fifth Circuit
RULE 35. EN BANC DETERMINATION
35.1 Caution. Counsel are reminded that in every case the duty
of counsel is fully discharged without filing a petition for
rehearing en banc unless the case meets the rigid standards of
FRAP 35(a). As is noted in FRAP 35, en banc hearing or
rehearing is not favored. Among the reasons is that each request
for en banc consideration must be studied by every active judge
of the court and is a serious call on limited judicial resources.
Counsel have a duty to the court commensurate with that owed
their clients to read with attention and observe with restraint the
standards of FRAP 35(b)(1). The court takes the view that,
given the extraordinary nature of petitions for en banc
consideration, it is fully justified in imposing sanctions on its
own initiative under, inter alia, FRAP 38 and 28 U.S.C. § 1927,
upon the person who signed the petitions, the represented party,
or both, for manifest abuse of the procedure.
1.0.P. Petition for Rehearing En Banc
Extraordinary Nature of Petitions for Rehearing Er Banc
— A petition for rehearing en banc is an extraordinary procedure
that is intended to bring to the attention of the entire court an
error of exceptional public importance or an opinion that
directly conflicts with prior supreme court, fifth circuit or state
law precedent, subject to the following: alleged errors in the
facts of the case (including sufficiency of the evidence) or in the
application of correct precedent to the facts of the case are
30a
generally matters for the panel rehearing but not for rehearing
en banc.
3la
APPENDIX G
Local Rules for the United States Court of Appeals fr the
Sixth Circuit
RULE 35 DETERMINATION OF CAUSES
BY THE COURT EN BANC - REQUIRED
STATEMENT - HOW REQUESTED -
WHEN CONSIDERED
(a) Suggestion for Rehearing En Banc. A suggestion for a
hearing or rehearing en banc may be made as s provided i in FRAP
35 or by any member of the en banc Court. The effect of the
granting of a rehearing en banc shall be to vacate the previous
opinion and judgment of this Court, to stay the mandate and to -
restore the case on the docket as a pending appeal. Any petition
for rehearing containing a suggestion for rehearing en banc
shall so state plainly on the cover and in the title to the
document. A suggestion for rehearing en banc will also be
treated as a petition for rehearing before the original panel.
Twenty-five copies shall be filed. A copy of the opinion or final
order sought io be reviewed shall accompany each of the 25
copies of the suggestion for en banc review. This Court
ordinarily will not consider any such suggestion which fails to
conform to this rule.
(b) Counsel Not Obligated to File. En banc consideration of a
case is an extraordinary measure, and in every case the duty of
counsel is fully discharged without filing a suggestion for
rehearing en banc unless the case meets the rigid standards of
FRAP 35(a). The filing of a petition for rehearing, with or
without a suggestion for rehearing en banc, is not a prerequisite
to the filing of a petition for writ of certiorari.
32a
(c) Extraordinary Nature of Suggestion for Rehearing En Banc.
A suggestion for rehearing en banc is an extraordinary
procedure which is intended to bring to the attention of the
entire Court a precedent-setting error of exceptional public
importance or an opinion which directly conflicts with prior
Supreme Court or Sixth Circuit precedent. Alleged errors in the
determination of state law or in the facts of the case (including
sufficient evidence), or errors in the application of correct
precedent to the facts of the case, are matters for panel
rehearing but not for rehearing en banc.
33a
APPENDIX H
Local Rules for the United States Court of Appeal for the
Ninth Circuit
RULE 35-1. PETITION FOR REHEARING EN BANC
Where a petition for a rehearing en banc is made pursuant to
FRAP 35(b) as part of a petition for rehearing, a reference to
such suggestion, as well as to the petition for rehearing, shall
appear on the cover of the petition.
When the opinion of a panel directly conflicts with an existing
opinion by another court of appeals and substantially affects a
rule of national application in which there is an overriding need
for national uniformity, the existence of such conflict is an
appropriate ground for suggesting a rehearing en banc.
=a
34a
APPENDIX I
Local Rules for the United States Court of Appeals for
the Tenth Circuit
RULE 35. EN BANC DETERMINATION
RULE 35.1. EN BANC CONSIDERATION
(A) Extraordinary Procedure.
A request for en banc consideration is disfavored. En banc
review is an extraordinary procedure intended to focus the
entire court on an issue of exceptional public importance or on
a panel decision that conflicts with a decision of the United
States Supreme Court or of this court.
APPENDIX J
Local Rules for the United States Court of Appeals for
the Eleventh Circuit
RULE 35-3. EXTRAORDINARY NATURE OF
PETITIONS FOR EN BANC CONSIDERATION
A petition for en banc consideration, whether upon initial
hearing or rehearing, is an extraordinary procedure intended to
bring to the attention of the entire court a precedent-setting
error of exceptional importance in an appeal or other
proceeding, and, with specific reference to a petition for en
banc consideration upon rehearing, is intended to bring to the
attention of the entire court a panel opinion that is allegedly in
direct conflict with precedent of the Supreme Court or of this
circuit. Alleged errors in a panel's determination of state law, or
in the facts of the case (including sufficiency of the evidence),
or error asserted in the panel's misapplication of correct
precedent to the facts of the case, are matters for rehearing
before the panel but not for en banc consideration.
Counsel are reminded that the duty of counsel is fully
discharged without filing a petition for rehearing en banc if the
rigid standards of FRAP 35(a) are not met, and that the filing of
a petition for rehearing or rehearing en banc is not a
prerequisite to filing a petition for writ of certiorari.
36a
APPENDIX K
Case No. 01-1947
IN THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
BRIAN OLANDER,
Appellant,
V.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY, et al.,
Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
OF NORTH DAKOTA, SOUTHWESTERN DIVISION
Honorable Rodney S. Webb, Judge
Robert J. Udland #3350
Vogel, Weir, Hunke &
McCormick, Ltd.
502 1* Avenue North
Fargo, N.D. 58102-4804
TEL: 701-237-6983
FAX: 701-237-0847
rju@vogellaw.com
37a
Dale L. Beckerman #26937
Deacy & Deacy, LLP
920 Main St., Suite 1900
Kansas City, MO 64105
TEL: 816-421-4000
FAX: 816-421-7880
dib @deacylaw.com
38a
A. PETITION FOR PANEL
REHEARING
Come now appellees, pursuant to Rule 40, F.R.A.P. and
Eighth Circuit Rule 40A and move for panel rehearing for the
reason that the Court overlooked or misapprehended the
following matters of law and fact:
1. The Agent’s Agreement specifies no duration
and is of indefinite duration.
a Under North Dakota law, an agreement for
services with no definite duration is terminable at will by either
party.
2 The parties agreed that the Agent’s Agreement
stated their entire agreement (Appellees’ Add. 9 VI.E.), thus
subject to N.D.C.C. §§ 9-07-02, -04.
4. The silence of the Agreement as to cause for
termination does not render the Agreement ambiguous under
North Dakota law.
5. Termination review is not an inquiry for good
cause and inclusion of language concerning the right to review
and the expectation of a satisfactory relationship do not render -
the Agreement ambiguous.
6. Each of the several reported decisions which has
examined State Farm’s Agent’s Agreement has held that it is
unambiguous.
* The Court relied on (Slip Op. 8), but
misapprehended, the decision in Kaldi v. Farmers Insurance
Exchange, 21 P.3d 16 (Nev. 2001), which actually establishes
that State Farm’s Agreement is unambiguous.
39a
8. The Agreement (App. Add. 5-6) unambiguously
gave each party the right to terminate at any time on notice.
9. There is no relevant parol evidence to consider.
Plaintiffs admitted that no representative of State Farm had
made any statement to him or representation about how or when
the Agreement could be terminated. Olander Depo. 264-65
found at Jt.App. 189-90.
B. PETITION FOR REHEARING EN
BANC
Comes now appellees pursuant to Rule 35, F.R.A.P. and
move for rehearing en banc for the reason that:
i, The decision of the panel is contrary to decisions
of this Court, specifically: Crowell v. Campbell Soup Co., 264
F.3d 756, 761 (8" Cir. 2001); Martin v. Equitable Life
Assurance Society, 553 F.2d 573 (8" Cir. 1977) and
consideration by the full Court is necessary to secure and
maintain uniformity of the Court’s decisions.
Z. The decision of this Court raises matters of
exceptional importance in that:
(a) Appellees have contracts with hundreds of
agents throughout this Circuit, all of which have language
concerning termination similar to that at issue in this appeal.
The parties need stability and predictability in their contractual
relationships. The decision of the divided panel creates
uncertainty and impairs the stability and predictability of those
contractual relationships.
(b) The decision addresses fundarnental aspects of
the contract law of a Circuit State, and creates substantial
40a
instability and unpredictability concerning the contract law of
North Dakota and whether N.D.C.C. §§ 9-07-02 and -04 and
the Parol Evidence Rule have as much vitality in this Court as
in the Supreme Court of North Dakota.
(c) Many types of personal service agreements
contain similar termination review clauses and arguably are
now ambiguous and/or require cause to terminate in this
Circuit.
Cc. ARGUMENT FOR PANEL
REHEARING
Olander’s Agent’s Agreement contained a simple clause
granting to each party the right to terminate: “You or State
Farm have the right to terminate this Agreement by written
notice delivered to the other or mailed to the other’s last known
address.” Appellees’ Add. at 5 (emphasis added). It was not
simply a notice provision; it granted the right to terminate.
Other State Farm Agreements with agents, including
that language, have been uniformly construed in the reported
cases to permit either party to terminate at will. Mooney v.
State Farm Insurance Companies, 344 F.Supp. 697 (D.N.H.
1972); Melnick v. State Farm Mutual Automobile Insurance
Co., 749 P.2d 1105 (N.M. 1988), cert denied, 499 U.S. 822,
109 S.Ct. 67, 102 L.Ed.2d 44 (1988); Vitkauskas v. State Farm
Mutual Automobile Insurance Co., 509 N.E.2d 1385 (Hil. App.
1987). The dissent cited similar cases. This Court overlooks
those well-reasoned rulings.
The Agent’s Agreement is silent as to duration. Under
North Dakota law, it is thus an agreement of indefinite duration.
North American Pump Corp. v. Clay Equipment Corp., 199
S.W.2d 888, 894 (N.D. 1972) (cited in Appellees’ Brief at 22).'
Under the law of North Dakota, an agreement for
services of indefinite duration can be terminated at will by
either party:
This Court has held that where parties enter into
an agreement by the terms of which one party is
to perform services for the other, and the
contract neither expressly nor impliedly fixes
the time of its duration, it may be terminated by
either party by the giving of notice to the other.
North American Pump Corp. v. Clay Equipment Corp., 199
S.W.2d 888, 894 (N.D. 1972). See also Myra Foundation v.
L.A. Harvey, 100 N.W.2d 435 (N.D. 1960) (Syllabus 41). By
statute North Dakota has adopted the same rule for the
employment relationships. N.D.C.C. § 34-03-01. This is also
the general rule for insurance agency agreements. 13 Holmes,
Holmes’ Appleman on Insurance 2d § 99.2 (1999).
Olander and State Farm expressly agreed that the
Agent’s Agreement contained their entire agreement. Their
contract stated:
E. This Agreement constitutes the sole and
entire Agreement between the parties hereto,
and no change, alteration, or modification of the
terms of this Agreement may be made except by
'The case clearly turns on interpretation of the law of North Dakota
and prediction of how that State’s Supreme Court would resolve the legal
issues presented. Appellees would respectfully point out to the Court that
on rehearing it would be open to this Court to seek the guidance of the
Supreme Court of North Dakota on these state law issues. See Rule 47,
N.D.R.App.P.
42a
agreements in writing signed by an authorized
representative of the Companies and accepted
by you.
Appellees’ Addendum 9. Therefore the rules announced in
cases such as Schue v. Jacoby, 162 N.W.2d 377 (N .D. 1968);
Putnam y. Dickinson, 142 N.W.2d 111 (N.D. 1966) and
Jorgensen v. Crow, 466 N.W.2d 120 (1991) are inapposite to
construction of this writing.” In those cases the writing was not
the complete agreement; indeed, in Jorgensen, the parties
agreed that the agreement was partially oral and partially
written.
Olander’s agreement was exactly the opposite: He
expressly agreed the writing was the entire agreement.’
Because the agreement was integrated, the relevant law does not
involve partial written agreements, but the Parol Evidence Rule
and N.D.C.C. §§ 9-07-02, 9-07-04 which provide that where the
parties have reduced their agreement to writing, the writing
must be used to determine their intent:
§ 9-07-02. The language of a contract is to
govern its interpretation if the language is clear
and explicit and does not involve an absurdity.
* For example, as the Court discusses in its Opinion (5-6), Schue recognizes
that in some circumstances there may be proof of separate oral or written
agreements on which the contract is silent. As discussed in the text, these
parties made precisely the opposite agreement. That fact was entirely
overlooked and should be respected.
3 Also overlooked by the Court is the fact that, when it entered into the
Agent’s Agreement with Olander, State Farm relied on his acceptance of the
“entire agreement” language; thus, Olander is estopped to change his
position now and assert that the writing does not represent the entire
agreement.
43a
KK
§ 9-07-04. When a contract is reduced to
writing, the intention of the parties is to be
ascertained from the writing alone if possible,
subject, however, to the other provisions of this
chapter.
Concerning the Parol Evidence Rule, see Des Lacs Valley Land
Corp. v. Herzig, 621 N.W.2d 860, 862 (N.D. 2001):
In Gajewski, 221 N.W.2d at 627, we concluded
oral testimony was incompetent and
inadmissible (1) to vary or contradict an
executed and delivered quitclaim deed; (2) to
prove the deed was security for repayment of a
loan; and (3) tonullify the grant contained in the
deed. We said:
The parol evidence rule has been
variously defined and has been
best stated as follows:
“Where parties, without any
fraud or mistake, have
deliberately put their
engagements in writing, the law
declares the writing to be not
only the best, but the only,
evidence of their agreement:’ ...
‘all preliminary negotiations,
conversations, and _ verbal
agreements are merged in and
superseded by the subsequent
written contract ... and “unless
fraud, accident, or mistake be
44a
averred, the writing constitutes
the agreement between the
parties, and its terms cannot be
added to nor subtracted from by
parol evidence.”’”’” Associated
Hardware Supply Co. v. Big
Wheel Distributing Company,
355 F.2d 114, 119 (3d Cir.
1965), 17 A.L.R.3d 998.
(emphasis added}
Silence as to cause does not render the Agreement
ambiguous. See Yon v. Great Western Dev. Corp., 340
N.W.2d 43, 46 (1983) (silence of contract for deed concerning
remedies for default did not render contract ambiguous and
make parol evidence admissible: “The fact that the default
provision is silent as to remedies other than cancellation does
not suggest that the contract is in this regard ambiguous.”).
The Court overlooked that and Wadeson v. American
Family Mutual Ins. Co., 343 N.W. 367 (N.D. 1984) where
plaintiff claimed his insurance agent’s agreement could only be
terminated for cause. As discussed below, he placed principle
reliance on assurances of a long-term career. The Court heid
that the agreement was terminable at will, noting that the
agreement provided (much like appellees’) that it “may be
terminated by any party as to its interest by giving written
notice to the other” and that any “alteration or modification of
its terms must be made by an agreement in writing signed,” that
language supported termination at will. The Court attached no
significance to the silence concerning cause.
Under N.D.C.C. §§ 9-07-02, -04 North Dakota law
presumes that, had these parties made any agreement in 1981
concerning cause as a requirement for termination, that would
have been reflected in the writing they agreed was complete.
45a
Thus, the fact that cause is not mentioned leads to only one
conclusion: The parties did not make an agreement concerning
cause. Opening the door now, some 21 years later, to the
addition of a requirement of cause permits addition of a term
which directly contradicts the writing the parties stipulated was
their entire agreement. As the North Dakota Supreme Court’s
very recent formulation of the Parol Evidence rule in Des Lacs
(quoted immediately above) makes clear, the Agent’s
Agreement’s “terms cannot be added to nor subtracted from by
parol evidence”; yet, that is exactly what this ruling would give
Olander the opportunity to do.* The Court overlooks all of this
as well as the fact that Olander admitted that no one from State
Farm made representations to him concerning how or when the
Agreement could be terminated. Jt. App. 189-90.
In support of the conclusion that other provisions of the
Agreement render it ambiguous on the issue of whether cause
is required for termination, the Court points to only two
provisions. Those are Section III, paragraph B, which entitles°
the agent to seek to a review and the next to last paragraph of
the Preamble which expresses the expectation a mutually
satisfactorily relationship will be created and maintained.
: Agents are compensated by commission under the Agreement. Following
the logic of the Opinion, an agent dissatisfied with his or her income could
claim that, in addition to commission, appellees agreed to a guarantee of
several thousand dollars a month income (so the relationship would be
“satisfactory” per the Preamble) and point to silence of the Agreement as
evidence of ambiguity on the point. That misapprehends North Dakota law.
See Des Lacs, supra.
> The Court also overlooks the fact that the Agreement uses similar
language (“you are entitled”) to grant the agent the right to review as it uses
to grant the parties the right to terminate in III.A (“you ... have the right”).
Yet the Court inexplicably treats them differently, regarding III.B as the
grant of a right of review and III.A as a notice provision (Op. 5).
46a
Neither provision mentions cause. As the decided cases
show, neither lends any support to the proposition that cause is
required to terminate the Agreement. Because Olander did not
brief the argument, appellees did not address the issues directly,
and it is thus understandable the cases which follow were
overlooked.
The Review Process.° The review is not a search for
cause. Cause is not in the Agreement language (Appellees’
Add. 5-6), nor in the description of the process. Jt. App. 719.
The President has sole discretion to decide whether to uphold
termination.
Inclusion of a review process such as State Farm’s does
not render an insurance agency agreement ambiguous or imply
a possible cause requirement. Just last year, in Kaldi v.
Farmers Insurance Exchange, 21 P.3d 16 (Nev. 2001) (cited
in the dissent), plaintiff argued that Farmers’ inclusion of a
review process implied that cause was required to terminate.
The Supreme Court of Nevada disagreed:
While provision “D” [the review provision]
unambiguously provides for a review of the
Agent’s termination, it does not indicate that the
review is to establish the presence or absence of
good cause. It merely provides a forum for
arguing that the decision to end the agency
6 The Court also overlooks the fact that by failing to avail himself
of the review process, Olander failed to exhaust the remedies available to
him and this contract claim fails for that reason as well. Cooke v. University
of North Dakota, 603 N.W.2d 504 (N.D. 1999); Thompson v. Peterson,
564 N.W.2d 856, 861 (N.D. 1996). Olander did receive the termination pay
specified by the Agreement. Also, by §§1.D. and E. of the Agreement, State
Farm owned the business records, accounts and other items it removed after
termination. Thus, the Court errs when it refers to those as “Olander’s”.
Slip Op. 2.
47a
relationship should be reconsidered ... Provision
“D” cannot be reasonably read to require
Farmers to establish good cause —
terminating the Agreement.
21 P.3d at 20-21 (emphasis added). Thus, the Court’s reliance
on Kaldi as supporting ambiguity (Slip Op. at 7) completely
misapprehends the holding there. The Nevada Court went on
to explain the purpose of the review:
The review board gives the agent the
opportunity to assert that it is not in the best
interest of Farmers to sever the agency
relationship. It also gives the agent, in
appropriate circumstances, a forum in which to
argue that the termination was the product of
bias or prejudice on the part of the person who
made the initial decision to terminate the
relationship. That is, the termination was not
made to further the interests of Farmers, but the
interests of the executive who made the
decision. Thus, even without a requirement of
cause, the review board serves a viable purpose
under the contract.
Similar provisions appear in many kinds of contracts. All of
those in this Circuit may now be ambiguous or require cause for
termination.
Also, as pointed out in Apellees’ Brief, Mooney v. State
Farm Insurance Companies, 344 F.Supp. 697 (D.N.H. 1972)
rejected this notion with reference to the review process
included in Olander’s contract:
The review hearing provision does not change
the termination clause, nor does it render that
clause ambiguous. Its purpose is to benefit
48a
defendant by providing review of lower
management decisions to terminate and reversal
where those decisions are based on poor
judgment.
*
There is no mention of “due cause” in the
contract, but plaintiff seeks to overcome this by
reading into the review provision an unstated
requirement that due cause must be found
before the contract can be terminated. This not
only strains credulity, but flies in the face of
common sense and accepted contract law.
Surely the company could not require the
plaintiff to continue the agency contrary to the
plaintiff's desire to terminate.
344 F.Supp. at 699-700 (emphasis added). The Court
overlooked the Mooney case.
The Preamble. The Court overlooked the fact that the
Supreme Court of North Dakota has expressly held that
language such as that in the Preamble does not under North
Dakota law imply that cause is necessary for termination. In
Wadeson v. American Family Mutual Ins. Co., 343 N.W. 367
(N.D. 1984), also an insurance agent case, plaintiff pointed out
that defendants’ recruiting materials represented that a position
with defendant was a “lifetime opportunity” and a “permanent
and stable business” opportunity. He argued, as Olander did at
oral argument, that those representations implied that cause was
necessary for termination. The Supreme Court of North Dakota
dismissed that argument:
We do not read such statements used in
recruiting new agents to be promises either of
49a
permanent employment or that one will only be
discharged for good cause.
Id. at 371 (emphasis added).’
The Agreement is complete and unambiguous. The
decision of the Court would permit plaintiff to use parol
evidence to contradict the terms the parties chose, contrary to
the strong statutory and case law of the forum state.
D. ARGUMENT FOR REHEARING EN
BANC
The basic question is whether an independent contractor
insurance agent’s agreement was terminable at will by the
insurers after the agent was involved and charged in the violent
death of his neighbor in an altercation on a rural road.
1. The decision of the panel is contrary to decisions
of this Court.
In Crowell v. Campbell Soup Co., 264 F.3d. 765, 761
(8" Cir. 2001) this Court read almost identical language to
permit termination at will when governed by similar law.
There, the agreement provided that:
either party may elect to terminate this
Agreement by written notice received by the
other party at any time that no flock is placed or
scheduled to be placed with GROWER.
7 Although the recitations in the Preamble are part of the Agreement, they
do not have the dignity of the provisions of the actual agreement and are not
binding unless expressly incorporated into the remainder of the Agreement.
Olympic Chevrolet, Inc. v. General Motors Corp., 959 F.Supp. 918, 92-23
(N.D. Ill. 1997). Olander’s Agent’s Agreement does not incorporate them.
50a
Plaintiffs argued that casue was required based on oral
discussions. As did both the Magistrate and District Judge
here, the Disrtict Court in Crowell held that cause was not
required. This Court affirmed.
In Martin v. Equitable Life Assurance Society, 553 F.2d
573 (8 Cir. 1977), the District Court found the insurance
agent’s agreement ambiguous and this Court reversed. This
Court held that even though there was language concerning
termination for specific causes, that did not render the
termination at will cause ambiguous. Thus, it rejected the exact
mode of analysis employed by the panel in this case when the
panel found ambiguity based upon other provisions.
a The decision of this Court raises matters of
exceptional general importance.
a. Appellees have contract with hundreds of agents
throughout the Circuit, all of which have language concerning
termination similar to that at issue in this appeal. The parties
need stability and predictability in those contractual
relationships. That is a fundamental aim of contract law. The
prior reported decisions uniformly hold that the Agreement is
unambiguous and permits termination at will by either party.
Mooney v. State Farm Insurance Companies , 344 F.Supp. 697
(D.N.H. 1972); Melnick v. State Farm Mutual Automobile
Insurance Co., 749 P.2d 1105 (N.M. 1988), cert denied, 499
U.S. 822, 109 S.Ct. 67, 102 L.Ed2d 44 (1988); Vitauskas v.
State Farm Mutual Automobile Insurance Co., 509 N.E.2d
1385 (Ill. App. 1987). See Kaldi v. Farmers Insurance
Exchange, 21 P.3d 16 (Nev. 2001); Patillo v. Equitable Life
Assurance Soc’y of the United States, 502 N.W.2d 696, 699
(Mich. App. 1993); James H. Washington Ins. Agency v.
Nationwide Mut. Ins. Co., 643 N.E.2d 143, 147 (Ohio App.
1993). North Dakota law, which governs here, has as much
respect for the integrity of the parties written, entire agreement
Sla
as the jurisdictions in which the earlier cases were decided.
This Opinion introduces untold uncertainty and instability into
those relationships.
b. North Dakota rigorously enforces its Parol
Evidence rule and associated statutes where, as here, the writing
is the complete agreement. See Des Lacs Valley Land Corp.
v. Hezig, 621 N.W.2d 860, 862 (N.D. 2001); N.D.CC.§§ 9-07-
02, -04. That State (whose law governs) does not permit parol
evidence to contradict the terms of such agreement; this Court
is obligated to follow that lead. Instead, this decision will cause
great uncertainly about the vitality in this Court of those North
Dakota rules.’ Absent a hearing by the entire Court and/or a
reference to the Supreme Court of North Dakota under Rule 47,
N.D.R.App.P., the panel opinion should not be permitted to
cause such uncertainty.
¢. Many types of employment and service
agreements contain review provisions similar to the Agent’s
Agreement. This opinion suggests that all such contracts in this
Circuit are ambiguous or may require cause. That is
unprecedented.
With all due respect, the decision is not a correct
application of North Dakota law and is not a correct
construction of the contract. It will cause much unnecessary
expenditure of District Court time in this case and confusion in
other cases. Justice and efficient judicial administration require
that it be corrected now by the panel or the Court En Banc. For
the above and forgoing reasons appellees respectfully urge that
the case be reheard by the panel and/or en banc.
® This decision will call into question the ability to sustain in this Court any
parol evidence or termination at will argument.
52a
Respectfully Submitted.
Robert J. Udland #3350 Dale L. Beckerman #26937
Vogel, Weir, Hunke & Deacy & Deacy, LLP
McCormick, Ltd. 920 Main St., Suite 1900
502 1* Avenue North Kansas City, MO 64105
Fargo, N.D. 58102-4804 TEL: 816-421-4000
TEL: 701-237-6983 FAX: 816-421-7880
FAX: 701-237-0847 dlb @deacylaw.com
rju @ vogellaw.com
53a
APPENDIX L
Case No. 01-1947
IN THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
BRIAN OLANDER,
Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY, et al.,
Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
OF NORTH DAKOTA, SOUTHWESTERN DIVISION
Honorable Rodney S. Webb, Judge
54a
Irvin B. Nodland William P. Tedards, Jr.
109 N. Fourth Street, 1101 30" Street, N.W.,
Suite 300 . Suite 500
Bismarck, ND 58502 Washington, DC 20007
TEL: 701 222-303 TEL: 202 797-9135
FAX: 701 222-3586 FAX: 202 797-9139
February 20, 2002 Attorneys for Appellant
55a
I. THE PETITION DOES NOT
PRESENT A BASIS FOR A PANEL
REHEARING
Following basic North Dakota principles governing the
construction of contracts, the Court examined the contract as a
whole to determine whether rational arguments could be made
for different positions on the question whether State Farm could
exercise the termination on notice provision without just cause.
See, e.g., Kaler v. Kraemer, 603 N.W.2d 698, 702 (N.D. 1999)
(“‘acontract is ambiguous when rational arguments can be made
for different positions about its meaning”) and Nat’] Bank of
Harvey v. Int’] Harvester Co., 421 N.W.2d 789, 802 (N.D.
1988) (the intention of the parties “must be gathered from the
entire instrument, not from isolated clauses, and every clause,
sentence, and provision should be given effect consistent with
the main purpose of the contract’)(emphasis added).
The Court noted that the contract was silent on the
question whether State Farm could exercise the termination
provision without just cause (thereby creating the question), but
the Court did not reach its determination that rational arguments
could be made for different positions on that basis, alone:
“[W]e have no disagreement with the dissent’s explanation of
the general rule that silence alone does not create an
ambiguity.” (Decision, page 5.) Following the North Dakota
methodology, the Court went on to examine the rest of the
contract so as to “give effect to every part” and use “[e]ach
clause to help interpret” the termination on notice provision.
(See N.D.C.C. § 9-07-06.)
First the Court examined Paragraph B of Section III of
the contract, which provides:
In the event we terminate this Agreement, you
are entitled upon request to a review in
56a
accordance with the termination review
procedures approved by the Board of Directors
of the Companies, as amended from time to
time.
In moving for summary judgment, State Farm did not provide
the Court with the “termination review procedures” which are
incorporated into the paragraph by reference, and the contract
does not otherwise explain the purpose of the termination
review or the manner in which the termination review is to be
conducted. The Court concluded from the incomplete evidence
before it: “{wJhile by no means foreclosing other
interpretations, one rational explanation for the existence of the
review procedure is to ensure that any termination was made for
good cause, and not capriciously.” (Decision, page 0
Taking issue with this conclusion, the dissent argued
that other cases construing other review procedures had
coricluded that review procedures were not a search for cause.
(Dissent, page 10.) In its Petition for Panel Rehearing, State
Farm adds one of its own cases, the Mooney decision, a 1972
case from the District of New Hampshire. Those cases do not
dictate a conclusion that, in the present case, the Court is in
error in seeing a rational possibility that the termination review
procedure in this case, where the currently applicable principles
and procedures, though part of the contract, are not yet before
the Court, could be a search for cause.
The Court’s determination that a rational argument
exists for the interpretation that State Farm may not terminate
the contract without just cause draws further support from
Sections I(D), I(E), (G), MI(D), and HI(E) of the contract.
Section I(E) required Olander to invest heavily over the years
to develop his own business, bearing all the capital cost and
expense burden of establishing, operating, and expanding the
business. Section I(G) prohibited Olander from establishing a
57a
business relationship with any other insurance company.
Section I(D) identified all of Olander’s business good will (i.e.,
every bit of information he had about his clients) and operating
information as the exclusive property ~f State Farm. Section
Ili(D) required Olander to turn over al! vi his business goodwill
and operating information to State Farm within ten days after
his termination. Section III(E) required Olander to sever his
entire business relationship with all of his clients for one year
after his termination.
The design and effect of these provisions was to allow
State Farm, upon termination, to appropriate the entire business
that Olander had developed over many years and to sever
Olander’s relationship with his entire client base. Under these
circumstances, it would have been highly irrational for Olander
(or any other State Farm agent) to agree that his contract could
be terminated at will, without any cause whatsoever.
These provisions apply, regardless of which party
terminates the contract. That is why State Farm’s arguments
directed to the “mutuality” of the termination right are
irrelevant. In every case, termination of the contract means a
major windfall for State Farm and forfeiture of an entire
business by the agent. Under these circumstances, the agents
“right” to terminate without cause and without a termination
review is illusory, without meaning.
This feature of the State Farm contract, which was
discussed at the oral argument though not emphasized in the
Decision, further supports the Court’s conclusion that a rational
argument can be made that the contract is not terminable
without cause.
This post-termination handling of the business is the
critical distinction between this case and the Kaldi \ . Farmers
Insurance case from the state of Nevada, which the Petition for
58a
Rehearing cites. Unlike State Farm, Farmers does not have a
contract which compels the agent to forfeit his entire business
upon termination. If Farmers ternainates an agent’s contract, the
contract requires Farmers to either (a) purchase the business by
paying the “Contract Value” of the business to the agent or his
heirs or (b) allow the agent to nominate a successor who will
operate the business for him after the termination. Kaldi v.
Farmers Insurance Exchange, 21 P.3d 16, 18 (Nev. 2001). With
those protections, an agent could rationally agree to a contract
terminable at will.
The Court draws further support for its determination
from a statement of purpose in the Preamble:
The Companies and the Agent expect that by
entering into this Agreement, and by the full and
faithful observance and performance of the
obligations and responsibilities herein set forth,
a mutually satisfactory relationship will be
established and maintained. (Emphasis in the
Decision.)
(Decision, page 7.) This statement of purpose suggests that
State Farm will not terminate the contract so long as Olander
performs his contract obligations fully and faithfully. By
interpreting the termination provision in light of this statement
of purpose, the Court is continuing to apply North Dakota
contract construction principles. See, e.g., Nat’l Bank of
Harvey v. Int’] Harvester Co., supra, at 802: “every clause,
sentence, and provision should be given effect consistent with
the main purpose of the contract.” (Emphasis added.)
The Petition for Rehearing does not provide any basis
for disturbing this straightforward application of North Dakota
law. On pages 3-4, the Petition cites several State Farm cases
from other jurisdictions, which did not address the salient
59a
features of the contract that have been identified and addressed
in this case. The petition refers to those cases as “well
reasoned” and suggests that the Court overlooked them. These
cases were not overlooked. They were cited in State Farm’s
brief and in the dissent. (They have also been cited regularly in
all of the cases on the West Coast that are being decided against
State Farm.) The problem with these cases is not that they have
been overlooked but that their reasoning is not persuasive.
There is no basis for concluding that the handful of
cases which have been decided in favor of State Farm have
established nationwide “settled contract expectations.” As the
Court knows, there are also several cases which have been
decided against State Farm on this issue, and there is no
evidence to suggest that the nationwide group of agents prefers,
or is resigned to, State Farm’s view of the contract.
On page 4, the Petition assumes, incorrectly, that the
State Farm contract is a narrow “personal services” agreement
and then cites two North Dakota cases for the proposition that
personal services and employment agreements of indefinite
duration are terminable at will by either party. These decisions
do not affect the Court’s determination. Olander’s contract was
not a mere “personal services” or employment agreement.
Olander was an independent contractor developing a sizeable
business with several employees, which produced a product --
insurance applications -- for State Farm. The policy reasons
which underly the general principle that State Farm is citing
(e.g., one should not be compelled to work against his will, an
employer should not be forced to interact with an employee
whom he dislikes) do not apply to this contract between two
business entities.
On pages 4-8, the Petition argues that the contract is a
fully integrated contract so that parol evidence may not be used
to try to establish a separate agreement outside the writing.
60a
These arguments are not on the point. Everyone agrees that this
is a fully integrated contract and that there is no other
agreement. What is at issue here is the interpretation of the
integrated contract and the methodology which is being used to
interpret it. No one is trying to “add or subtract” terms via
parol evidence, as the Petition attempts to suggest on page 8.
Il. THE PETITION DOES NOT
PRESENT A BASIS FOR A
REHEARING EN BANC
The Decision of the Court -- a fact-intensive analysis of
one company’s unique contract using basic North Dakota
contract principals -- is not contrary to the decision in either
Crowell v. Campbell Soup Co. or Martin v. Equitable Life
Assurance Society. In Crowell the Court, analyzing a contract
under Minnesota law, held that “alleged oral promises” which
“plainly contradicted the terms of the written contract” could
not be used to vary a termination clause in the contract.
Crowell v. Campbell Soup Co., 264 F.3d 756, 762 (8" Cir.
2001). In Martin, the Court held that a clause delineating
certain specific actions which would likely cause a termination
could not be used to vary a separate clause allowing termination
without cause. Martin v. Equitable Life Assurance Society, 553
F.2d 573, 575 (8 Cir. 1977). Neither of those cases presents
a fact pattern analogous to this case.
On page 13 of the Petition, State Farm suggests that this
Decision raises matters of “exceptional general importance,” in
that hundreds of agents in the Circuit have similar contracts and
need “stability and predictability’ in those contractual
relationships. What State Farm is actually saying is that one
party -- State Farm -- wants to exercise complete control over
these hundreds of agents and does not want this Court to
interfere with that control. It is highly doubtful that the
hundreds of agents, if asked, would express a desire for the
6la
“stability and predictability” of knowing that State Farm could
terminate them at will and confiscate their entire businesses
anytime it chose.
The comments on page 14 of the Petition to the effect
that this Decision threatens the “integrity” and the “vitality” of
North Dakota’s contract principles is completely off the mark.
In reaching its Decision, this Court assiduously followed
fundamental North Dakota contract principles, construing the
agreement to determine whether rational arguments could be
made for different positions about its meaning (Kaler_v.
Kraemer) by reading the agreement as a whole (N.D.C.C. § 9-
07-06), giving effect to all parts (Id.), using each clause to help
interpret others (Id.), and giving each provision an effect
consistent with the main purpose of the contract (Nat’] Bank of
CONCLUSION
This Decision is in complete accord with North Dakota
contract construction principles and with the line of decision of
this circuit. There is no basis for a panel rehearing or a
rehearing en banc.
Dated: February 20, 2002
Ls/
William P. Tedards, Jr.
1101 30” Street, N.W.,
Suite 500
Washington, DC 20007
TEL: 202 797-9135
FAX: 202 797-9139
62a
Irvin B. Nodland
109 N. Fourth Street,
Suite 300
P.O. Box 640
Bismarck, N.D. 58502-0640
TEL: 701 222-3030
FAX: 701 222-3586
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.